By Joseph Casella
In an ideal real estate market, homeowners who decide to sell their house and buy another one, would find their new dream home, find a buyer for their present home, and be able to close both transactions about the same time.
In reality, seldom does the market offer such ideal conditions. Whether you should buy your new home before selling your present home depends on the market. For that reason, it’s important to consider many factors about the market before making a decision.
Most important is the level of the real estate market. Are houses in your neighborhood selling quickly at higher prices in a “seller’s market”? This is the type of market we are in right now.
The opposite, of course, is a “buyer’s market,” in which properties are moving slowly and anxious sellers are reducing prices.
If you have a seller’s market in both your current neighborhood and the neighborhood of your prospective new home, it is usually better to pin down your new property before you put your old one on the market. The reasoning is that in a seller’s market your house should sell quickly, and it is best to have another property lined up so you don’t end up without a place to live.
If the home you want to sell is in a buyer’s market, it is usually better to have your current property under contract before you sign a contract to buy a new one. That is because in a buyer's market, you might get stuck with two houses if you buy too soon.
However, if you’re counting on using the equity in your current home for a down payment on the new house, this can be done , although it is risky to buy before you sell. Arranging a “bridge loan” will help you make the transaction work. It can be nerve-racking to have your first house sit on the market for months, but it may prove to be worth the trouble in a case where you might lose a highly desirable property by not going ahead with the transaction.
As you can see, determining the nature of the market in the areas of both the sale and the purchase is crucial in planning your strategy for buying and selling.
A real estate firm can be of valuable assistance in providing you with detailed, up- to-date market information. Having such information will make you a more informed, better-prepared buyer and seller, and reduce your risk of loss.
Joseph Casella is a licensed real estate broker and owner of Castle Realty in Astoria. He is editor and writer of Market Scope, a newsletter for property owners. He can be reached at 718-707-7019.
